Effect this measure will have on costs and revenues of state government.

The purpose of this bill is to create a tuition waiver program allowing medical students who commit to practice in an underserved area of West Virginia to pay in-state tuition. Two students would be selected each year to receive the waiver. These students would receive the waiver for each year of their enrollment. The bill sets forth the conditions for approval in the program. The bill provides for repayment of the tuition waiver if the student does not practice in the underserved area. The bill also grants rule making authority. The first year annual cost is expected to be $177,000 and increase to $648,000 upon full implementation.

Fiscal Note Detail

Over-all effect

Effect of Proposal

Fiscal Year

2012Increase/Decrease(use"-")

2013Increase/Decrease(use"-")

Fiscal Year(Upon FullImplementation)

1. Estmated Total Cost

0

177,000

648,000

Personal Services

0

0

0

Current Expenses

0

10,000

10,000

Repairs and Alterations

0

0

0

Assets

0

0

0

Other

0

167,000

638,000

2. Estimated Total Revenues

0

0

0

3. Explanation of above estimates (including long-range effect):

The non-resident fee differential for medical students is currently $26,790, $26,610, and $30,000 per year at Marshall University (MU), West Virginia University Health Sciences (WVUHS) and the West Virginia School of Osteopathic Medicine (WVSOM), respectively. The annual cost in terms of lost tuition and fees will start at $167,000. The cost will change as students who do not meet the legislation’s requirements make repayments and tuition rates increase. Upon full implementation, it is anticipated that approximately 50 percent of the students at MU and WVUHS will not meet the legislation’s requirements and be required to make repayments. About 20 percent of the WVSOM students are expected to make repayments. It is anticipated that tuition and fees for out-of-state students would increase about 5% per year.
Participating students would not need to make repayments unless they entered a nonqualified practice site upon completion of their residency program. Inflationary costs would continue to rise after full implementation.
From a budgetary standpoint if the program operates as a true “waiver” and the tuition loss is not replaced, the loss of $167,000 to $638,000 per year would be detrimental to the school’s’ operating budgets. The out-of state tuition and fee revenues fund expanding operational and capital needs. It would be difficult to meet accreditation requirements if revenues were severely curtailed.
The tracking of students’ residency statuses and the administration of repayments would require the services of a contractor. It is anticipated that this cost would be about $10,000 per year. It is expected that uncollectible loan expenses would be offset by interest charges.
If this program is approved it will also be critical to set the interest rates and penalties for non-compliance at a high enough level to discourage the non-residents from simply using this as another loan financing program with little real intent to fulfill the service commitment. Similar programs use repayment rates of 15 percent. If that were to happen, the participation rate and cost could escalate quickly. It is expected that uncollectible loan expenses would be offset by interest charges.